Another quarter, another look into the financial pulse of IOI Properties Group Berhad (IOIPG), a prominent Malaysian property developer with diversified interests across property development, investment, and hospitality. The latest quarterly financial report for the period ended 31 March 2025 presents a mixed picture, showcasing robust growth in key segments while navigating significant headwinds from rising interest costs.
While the Group’s overall profitability saw a decline due to the absence of a major land sale and higher financing expenses, the underlying performance of its property investment and hospitality segments continues to impress. Let’s dive deeper into the numbers to understand what’s driving IOIPG’s performance.
Core Financial Highlights: A Detailed Look
IOIPG’s performance for the quarter and the nine-month period ended 31 March 2025 reveals a strategic shift and the impact of recent investments. Here’s a breakdown of the key figures:
Quarterly Performance (31 March 2025 vs 31 March 2024)
Current Quarter (31 March 2025)
Revenue: RM755.2 million
Underlying Profit Before Tax (excluding inventories written down): RM183.0 million
Profit for the Period: RM77.7 million
Earnings Per Share: 1.38 sen
Preceding Year Corresponding Quarter (31 March 2024)
Revenue: RM902.1 million
Underlying Profit Before Tax: RM253.8 million
Profit for the Period: RM221.6 million
Earnings Per Share: 4.00 sen
For the current quarter, IOIPG reported revenue of RM755.2 million, a 16% decrease from the previous year’s corresponding quarter. This dip was primarily due to the absence of a significant land sale that boosted revenue in the prior period. More notably, the Group’s underlying Profit Before Tax (PBT) declined by 28% to RM183.0 million. This was largely impacted by a substantial increase in interest expenses, particularly following the commencement of operations at IOI Central Boulevard Towers (ICBT) in Singapore, which is still in its early stages of occupancy.
Year-to-Date Performance (9 Months Ended 31 March 2025 vs 31 March 2024)
Current Year-to-Date (31 March 2025)
Revenue: RM2.17 billion
Underlying Profit Before Tax: RM467.6 million
Profit for the Period: RM244.5 million
Earnings Per Share: 4.36 sen
Preceding Year Corresponding Period (31 March 2024)
Revenue: RM2.16 billion
Underlying Profit Before Tax: RM658.7 million
Profit for the Period: RM522.8 million
Earnings Per Share: 9.37 sen
On a cumulative basis for the first nine months of the financial year, revenue saw a modest 0.7% increase to RM2.17 billion, driven by stronger contributions from the property investment and hospitality segments. However, the underlying PBT for the nine-month period fell by 29% to RM467.6 million, again primarily due to the significant rise in interest expenses.
Deep Dive into Business Segments
Property Development Segment
This segment recorded a revenue of RM394.9 million for the quarter, a 41% decrease, and an operating profit of RM131.1 million, down 12%. The decline is mainly attributed to the absence of land sales in Senai, Johor, which significantly boosted revenue in the prior year. For the nine months, local projects, particularly in Klang Valley and Johor, remained strong contributors, leading to sales of RM1.14 billion. IOIPG’s efforts to reduce completed inventories have been successful, bringing the total down to RM1.57 billion, which helps generate immediate cash flow.
Property Investment Segment
A standout performer, this segment saw its quarterly revenue surge by 62% to RM250.7 million and operating profit by 78% to RM135.1 million. This robust growth was fueled by higher contributions from the newly acquired IOI Mall, Damansara (December 2024), and recurring lease income from IOI Central Boulevard Towers (ICBT) in Singapore. IOI City Mall also delivered record-high performance, underscoring the Group’s strength in managing its investment properties.
Hospitality & Leisure Segment
Revenue for this segment increased by 42% to RM105.4 million for the quarter, largely due to contributions from newly acquired hotels (WKL and Courtyard), and the opening of Moxy hotel and Sheraton Grand Hotel. However, the segment’s operating loss widened significantly from RM3.4 million to RM11.4 million, primarily due to pre-operating costs, marketing expenses, and depreciation charges associated with the new Sheraton Grand Hotel.
Financial Health Check
As of 31 March 2025, IOIPG’s total assets stood at RM45.73 billion, slightly lower than RM46.03 billion at 30 June 2024. Total equity decreased to RM23.71 billion from RM24.27 billion, reflecting the lower retained earnings. Total borrowings increased slightly to RM19.45 billion from RM19.17 billion, with a notable increase in short-term borrowings. The net assets per share attributable to owners of the Company also saw a slight decrease from RM4.38 to RM4.28.
Cash flow from operating activities decreased to RM575.9 million for the nine months, down from RM1.13 billion in the corresponding prior period. However, financing activities turned into a net inflow of RM150.8 million, compared to an outflow in the previous period, helping to partially offset the overall decrease in cash and cash equivalents.
Risks and Prospects: Navigating the Future
IOIPG acknowledges the challenging global business environment and trade uncertainties but remains optimistic about its future, backed by strategic initiatives and a diversified portfolio.
Opportunities and Strategic Focus:
- Property Development Resilience: Strong local sales momentum in established townships like IOI Resort City and Bandar Puteri Puchong in Klang Valley, and Bandar Putra Kulai and Taman Kempas Utama in Johor. The successful “30 Years Together” campaign in Johor aims to further boost sales.
- Effective Inventory Management: Significant reduction in completed inventories, which provides immediate cash flow for ongoing capital commitments and working capital needs.
- Property Investment Strength: Continued strong recurring income from retail and office assets. High occupancy rates at IOI City Mall and near 100% leasing commitment for IOI City Tower One highlight the Group’s expertise. IOI Central Boulevard Towers in Singapore has achieved 80% lease commitments, with further interest expected for the remaining premium Grade A office space.
- Hospitality & Leisure Growth: The “Visit IOI Resort City” campaign aims to establish IOI Resort City as a premier tourism destination, leveraging new hotel openings and expected benefits from “Visit Malaysia 2026”. The opening of Sheraton Grand Xiamen Jimei hotel in China further complements the integrated development there.
Challenges and Mitigation Strategies:
- High Interest Costs: This remains a significant challenge, especially with new large-scale projects like ICBT still in their early operational phases. The Group expects performance to improve progressively as occupancy rates rise.
- Geopolitical Risks and Economic Headwinds in PRC: The Group has responded by strategically re-aligning pricing for completed inventories in China, which has led to a gradual pick-up in sales.
- Initial Losses in Hospitality: Newly opened hotels incur pre-operating costs and depreciation, impacting segment profitability. However, these are expected to stabilize as operations mature and footfall increases.
Overall, the Group’s financial performance for the year is expected to remain satisfactory, supported by its diversified offerings across Malaysia, China, and Singapore, a substantial recurring income stream, and a positive outlook for the hospitality segment.
Summary and
IOI Properties Group Berhad’s latest quarterly report paints a picture of a company in transition, strategically investing in long-term assets while navigating immediate financial pressures. While the headline figures show a decline in overall profitability, this is largely attributable to one-off factors like the absence of a major land sale and the significant increase in interest expenses from newly operational, large-scale investment properties like IOI Central Boulevard Towers. This suggests that the impact is more on the financing cost side rather than a fundamental weakness in operational segments.
The robust growth seen in the property investment and hospitality segments, driven by strategic acquisitions and new developments, indicates strong underlying business momentum. The proactive management of property development inventories and targeted marketing campaigns further demonstrate the Group’s adaptability. As these new assets mature and achieve higher occupancy rates, their contribution to recurring income is expected to significantly bolster the Group’s financial position.
For Malaysian retail investors, it’s crucial to look beyond the immediate profit figures and consider the long-term growth potential anchored by IOIPG’s diversified portfolio and strategic investments. The Group’s commitment to enhancing its recurring income streams and optimizing its asset base points towards a resilient future, despite the current challenges posed by the high interest rate environment and market uncertainties.
Key risk points to monitor moving forward include:
- The continued impact of high interest expenses on overall profitability, especially as new large-scale projects like ICBT are still in their early stages of operation.
- Potential market uncertainties and economic headwinds, particularly in the People’s Republic of China, which could affect property sales and investment returns.
- The initial operating losses and depreciation charges from newly launched hospitality assets, which will require time to stabilize and turn profitable.
(Disclaimer: This blog post is for informational purposes only and does not constitute financial advice or . Readers should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.)
From a professional standpoint, IOIPG’s strategic long-term investments are clearly designed to enhance its recurring income base, which is a commendable move for stability and sustainable growth. However, the current period highlights the significant upfront costs associated with bringing these large-scale projects online, particularly in a high interest rate environment. The ability of the newly launched assets, especially ICBT, to quickly ramp up occupancy and revenue will be critical in offsetting these financing costs and improving the bottom line.
Given the ongoing high interest rate environment and the pipeline of new projects, do you think IOIPG can effectively manage its financing costs and translate its revenue growth into stronger bottom-line performance in the coming quarters? Share your thoughts in the comments section below!
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